Land deal concerns focus on appraisal

VIEWPOINT

December 1, 2013

The Arakawa administration has embarked on a public relations campaign to pressure the Maui County Council to acquire 186 acres in Launiupoko. There is a need to set the facts straight.

The concerns are not with negotiations, but rather the administration substantially misrepresenting the market value of the Launiupoko lands by manipulating the appraisal process and being less than honest with the council. In fact, the council was told only one appraisal existed, but there were actually two final appraisals and a draft.

The appraiser has stated that he provided a draft appraisal and, as the negotiations progressed, he received instructions on how to recalculate the property value. The administration has admitted that the instructions were given to the appraiser at the insistence of the seller. One unsupportable recalculation increased the value by $4.3 million. The administration inserted itself into the appraisal process and eliminated the independence of the appraiser. This is highly unusual and simply wrong.

The council should have been presented with an unbiased market value appraisal along with the seller's price demand. If the market value was significantly less than what the sellers were asking, the council could have decided to condemn the property rather than agree to the higher price.

As council members inquired about the validity of the appraisal, we were continually misled by the administration.

On Aug. 19, the Budget Committee asked the Finance Department to provide "all appraisals related to the county's purchase of any lands in Launiupoko, Maui." The finance director only provided the same Nov. 2, 2012, appraisal given to the council at the start of deliberations. No other appraisals were provided.

Subsequently, committee staff members contacted the Finance Department, notifying officials that it was the council's understanding an earlier appraisal was on file. Staff was informed that a draft existed, but that it had been destroyed.

On Sept. 20, the committee sent a letter to Mayor Alan Arakawa requesting "any earlier versions of the appraisal of the property at Launiupoko, including drafts," in addition to "any correspondence or other documents between the county and ACM Consultants Inc. relating to the factors, conditions or other information." The response was: "The mayor and managing director have decided not to respond to your request."

Therefore, the committee held a hearing and invited the appraiser who completed the November 2012 appraisal to attend. During the hearing, he stated, "Initially we were to look at the properties as a bulk parcel, then, based upon negotiations between the county and the seller, the assignment changed . . . according to how negotiations were going." The appraiser confirmed that he provided a draft appraisal based on the bulk land appraisal method.

After serious questioning at the Oct. 29 hearing, which was held to authorize a second, unbiased appraisal on the Launiupoko property, the finance director presented the committee with an appraisal dated Oct. 3, 2012, in the amount of $8.7 million. This was not the draft referred to by the appraiser. This document should have been provided to the committee when requested 10 weeks earlier.

Since an official offer was made to the seller with the appraisal, it cannot be considered a draft appraisal. In addition, the appraisal was not done as a bulk parcel valuation as stated by the appraiser on Oct. 15.

With the administration's unwillingness to provide requested documents, the council's responsibility to scrutinize the deal and obtain the truth has been stalled. The council made the proper decision to order a second, independent appraisal so that there will be a valid estimate of value on which a decision can be made.

Many feel the Launiupoko lands are priceless and should be preserved at any cost. However, council members must be responsible with our resources and be mindful that while the land may be priceless, our resources are not endless.

It is the council's job to provide oversight of the administration's decisions. We have done our job. Unfortunately, through this process, we have once again exposed a splintered trust.

I look forward to receiving a new, unbiased appraisal that will allow the council to make a responsible and informed decision on behalf of taxpayers and move ahead appropriately.

* Maui County Council Member Mike White is the chairman of the council's Budget and Finance Committee. He holds the council's Makawao-Haiku-Paia residency seat.